Macro 1 - IS or the LM curve Please explain c Based on your...

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In explaining the bill to cut taxes, the President is quoted as saying, “When people have more money, they can spend it on goods and services.” a. In the IS - LM model, will a tax cut change the money supply in the economy? Why or why not? b. In the IS - LM model, does a tax cut shift the
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Unformatted text preview: IS or the LM curve? Please explain. c. Based on your answers in a and b, how can you reconcile the President's statement regarding the bill to cut tax with economics? Can you suggest how his statement could be modified to be consistent with the IS-LM model?...
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This note was uploaded on 11/11/2010 for the course ECON Econ 301 taught by Professor Marya during the Fall '10 term at University of Massachusetts Boston.

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